TREC State Exam Practice questions

TREC State Exam Practice questions 1. TREC has the power to order witnesses to appear and/or produce records of documents for its investigations and hearings. This is called subpoena power. If a license holder fails to respond to a subpoena, what can TREC do? (a) TREC can assess an administrative penalty against the license holder for up to $4,000. (b) TREC can immediately revoke the license of the license holder without a hearing. (c) TREC can file suit with the Attorney General to enforce the subpoena. (d) TREC can file charges of felony against the license holder, based on fraud. - ANS (c) TREC can file suit with the Attorney General to enforce the subpoena. 2. A license holder in violation of the TRELA has received a summons from TREC that a hearing will be held regarding the possible revocation or suspension of his license. The license holder fails to respond to the summons. What will TREC do? (a) Schedule a hearing in the county court where the license holder practices real estate (b) Schedule a hearing at the TREC office in Austin (c) Schedule a hearing in the district court serving the license holder (d) Schedule a hearing at the main office or business address of the license holder - ANS (b) Schedule a hearing at the TREC office in Austin 3. With the knowledge and consent of her broker/employer, an unlicensed assistant is showing property to prospective buyers. What is true about this situation? (a) The broker and unlicensed assistant are both guilty of a third degree felony (b) Both the broker and unlicensed assistant can be fined an administrative penalty of $5,000 per day (c) Only the unlicensed assistant can be fined by TREC for this activity (d) Only the broker can be fined by TREC for this activity - ANS (b) Both the broker and unlicensed assistant can be fined an administrative penalty of $5,000 per day 4. TREC has received an application for a Texas Real Estate Sales License from Mary. Mary has completed all her educational requirements, and passed the state exam. At this point TREC will begin the background check. Which of the following statements is FALSE? (a) TREC has no time limit for determining integrity (b) TREC has 30 days to complete the background check (c) TREC has 30 days to notify Mary of a decision to disapprove her application (d) Mary has 10 days to appeal a denial of her application - ANS (b) TREC has 30 days to complete the background check TREC has no limit on days to review your application or complete your background check. They have 30 days to notify you of their decision and you have 10 days to appeal that decision. 5. Marcos was a Texas licensed Real Estate Sales agent for some time. He then chose to become inactive and TREC has been holding his license in inactive status. He now wishes to activate the license. What will he have to do? (a) Apply through a broker, pay $50 and take a 30-hour continuing education course (b) Apply through a broker, pay $200 and take a 30-hour continuing education course (c) Apply through a broker, pay $50 and take a 18-hour continuing education course (d) Apply through a broker, pay $200 and take a 15-hour continuing education course - ANS (c) Apply through a broker, pay $50 and take a 18-hour continuing education course 6. A license holder has defaulted on his Texas State Student loans. As a result of this TREC will: (a) require the license holder to pay a $200 penalty to renew his license (b) revoke the license of the license holder immediately (c) refuse to renew the license of this individual unless and until the loan payments are brought up to date (d) require the license holder to move his license to inactive status - ANS (c) refuse to renew the license of this individual unless and until the loan payments are brought up to date 7. When a license holder markets his own property, he should: (a) Use the IABS to disclose his interest in the property (b) Use the TREC promulgated form to disclose his interest in the property (c) Not mention his interest unless the buyer decides to buy the property (d) Inform the buyer that he is a license holder, and the owner of the property - ANS (d) Inform the buyer that he is a license holder, and the owner of the property 8. A Texas broker may pay a commission to: (a) A foreign broker who doesn't negotiate in Texas (b) A licensed attorney in Texas (c) An in-house employee of a principal (d) Any unlicensed person for a referral - ANS (a) A foreign broker who doesn't negotiate in Texas 9. Which of the following actions is NOT a violation of the Texas Real Estate License Act? (a) A broker offers a guaranteed buy back of a property for a set price, if the purchaser is not happy with the investment after a two-year period of ownership (b) A broker guarantees a buyer that, based on past performance, an investment property will appreciate over the next two years (c) Selling real estate by lottery (d) Placing a sign to sell or lease real property with only the verbal consent of the owner - ANS (a) A broker offers a guaranteed buy back of a property for a set price, if the purchaser is not happy with the investment after a two-year period of ownership 10. A sales agent wished to transfer to a new broker. When may he engage in the business? (a) When the new broker receives a license for him from TREC (b) After a waiting period of 48 hours (c) When his fees and sponsorship forms have been mailed to TREC (d) When TREC receives his request for transfer - ANS (c) When his fees and sponsorship forms have been mailed to TREC The moment your forms have been mailed (or e-mailed) to TREC and your license fee has been mailed (or i.e. pay pal) you work for the next broker. Your first broker must have your license the first time only, not for subsequent brokers. There is no waiting period. 11. Which of the following is the responsibility of the broker? (a) The listing advertisements of the sales agents he sponsors (b) The continuing education of the license holders he sponsors (c) The financial opportunities and success of the license holders he sponsors (d) The timely renewal of licenses by the sales agents he sponsors - ANS (a) The listing advertisements of the sales agents he sponsors 12. Without proper authorization, a sales agent may accept a commission directly from: (a) A seller (b) A buyer (c) His broker (d) The title company - ANS (c) His broker 13. A broker has a listed property. The owner mentions that a neighbor is interested in selling. The broker meets with the neighbor and secures a second listing. Both listings sell and the broker earns a commission on each. The broker would like to thank the owner of the first listed property for this referral. How can the broker thank the seller? (a) He can give the seller a gift of $50.00 cash (b) He can give the seller a gift of up to $100.00 in value, not cash (c) He can pay the seller whatever commission amount he agreed to pay for the referral (d) He cannot pay the seller any commission at all - ANS (d) He cannot pay the seller any commission at all 14. May has listed the property at 123 Main St. The sellers have told her that the property has 2,000 sq. ft. May has verified the square footage and entered this information correctly into the MLS. John, a license holder from another firm, shows the property to some buyer customers. He tells them that the property has 2,500 sq. ft. Who is liable for this misrepresentation? (a) May and her broker (b) John and his broker (c) The seller, the listing broker and the selling broker (d) The seller, listing broker and May, selling broker and John - ANS (b) John and his broker 15. In the event of a conflict between the statutory duties of Intermediary and the common law duties of dual agency of a broker, which takes precedence? (a) Common Law Dual Agency (b) Statutory Intermediary (c) Whichever the broker entered into first (d) Whichever the broker and the parties agree to - ANS (b) Statutory Intermediary 16. Broker Bob has a listing contract and a buyer's representation agreement, and so is acting as intermediary in a transaction. The buyer tells Bob that if he is successful in purchasing the property, he plans to buy all the surrounding property too. What should Bob tell the seller? (a) Nothing, as this is confidential information from the buyer (b) Bob must disclose all facts to the seller, including this information about the buyer (c) Bob should give the seller a broad indication of the buyer's intention, without disclosing specific facts (d) Bob should disclose the buyer's intention to the seller, and the seller's response to the buyer, as he is in intermediary status and owes disclosure to both parties - ANS (a) Nothing, as this is confidential information from the buyer 17. When must representation be disclosed and in what form? (a) In writing at the first face-to-face contact with a party (b) Orally or in writing at first contact (c) In writing at first contact (d) Using the TREC promulgated IABS at the first face-to-face contact - ANS (b) Orally or in writing at first contact 18. Which of the following is true and demonstrates the difference between the role of a Broker-Intermediary and the role of a Sales Agent-Appointee? (a) The sales agent may give advice and opinions to one party in the transaction (b) The sales agent may give advice and opinions to both parties in the transaction (c) The broker may give advice and opinions to one party in the transaction (d) The broker may give advice and opinions to both parties in the transaction - ANS (a) The sales agent may give advice and opinions to one party in the transaction 19. What is required in order for a broker to act as an intermediary? (a) The broker must have at least 2 associates to appoint to work with the parties in order to be an intermediary (b) The broker must have the written permission of the seller and the buyer, including information on how the broker is to be paid (c) The broker must have the written permission of the seller in the listing, but may have a verbal representation agreement with the buyer (d) The broker must use the TREC promulgated forms for intermediary status and appointments - ANS (b) The broker must have the written permission of the seller and the buyer, including information on how the broker is to be paid 20. TREC rules require a license holder to disclose his dual role if he is representing himself in a transaction. TREC also requires a license holder to disclose if his client is his: (a) Brother, sister, or parent (b) Brother, sister or child (c) Spouse, child or parent (d) Relative of any kind - ANS (c) Spouse, child or parent 21. John has listed the property at 17 Oak St. The sellers have received and accepted an offer from the buyers. The buyers have received the survey and it shows an encroachment that the sellers did not previously disclose. The buyers are not willing to purchase the property in this condition. What action on the part of the buyers must be taken? (a) Within 10 days, the buyers can notify the sellers that the contract is cancelled and demand the return of their earnest money (b) The buyers can sue the sellers for breach of contract (c) The buyers have the number of days mentioned in the contract to address survey problems with the sellers (d) The buyers must submit the survey to the sellers, checking the box on the survey form, indicating their intent to cancel the transaction - ANS (c) The buyers have the number of days mentioned in the contract to address survey problems with the sellers Paragraph 6D deals with title commitments, exceptions, and the survey as well as the number of days for the buyer to object to these items once received. 22. A buyer is unable to obtain credit approval as described in the Third Party Financing Addendum for Credit Approval. If the buyer provides the seller with written notice within the agreed-to number of days, which of the following is FALSE? (a) The contract is terminated (b) The buyer will lose his earnest money (c) The buyer is entitled to a return of his earnest money and there is no remedy for the seller (d) The buyer is not entitled to a refund of any option fee he paid - ANS (b) The buyer will lose his earnest money 23. According to the TREC One to Four Family Residential Contract, who is responsible for paying the owner policy of title insurance? (a) The buyer (b) The seller (c) The title company named in the contract (d) The party stipulated in the contract - ANS (d) The party stipulated in the contract This is a negotiable item in paragraph 6A. 24. Who is responsible for filling in the effective date of the real estate sales contract? (a) The party accepting the final offer (b) The agent of the party accepting the final offer (c) The broker (d) The seller - ANS (c) The broker 25. Which of the following is NOT found in the TREC 1-4 Family Resale Contract? (a) If the buyer makes an offer prior to receiving the Seller's Disclosure of Property Condition, the buyer will have 7 days to terminate the offer once he receives the disclosure (b) If lender required repairs exceed 20% of the sales price the buyer may terminate the contract (c) If lender required repairs are more than 5% of the sales price the buyer may terminate the contract (d) The contract encourages the parties to agree to mediation for dispute resolution - ANS (b) If lender required repairs exceed 20% of the sales price the buyer may terminate the contract Usually found in VA and FHA financing, if lender required repairs exceed 5% of the sales price, buyer may walk away and receive their earnest money back in paragraph 7E. 26. What TREC promulgated form should be incorporated into the contract when a buyer wants to obtain possession before the closing and funding of the transaction? (a) The Seller's Temporary Lease Addendum (b) The Buyer's Temporary Lease Addendum (c) The TREC Consumer Information Form 1-1 (d) The Addendum for the Sale of Other Property by the Buyer - ANS (b) The Buyer's Temporary Lease Addendum 27. Which of the following statements about multiple offers is true? (a) A broker with multiple offers can choose which to present and which to ignore (b) A broker with multiple offers must present them in the order in which they were received (c) A broker with multiple offers must screen them and present the best offer first (d) A broker with multiple offers must present all offers, but there is no required order of presentation - ANS (d) A broker with multiple offers must present all offers, but there is no required order of presentation 28. When must the option fee be delivered? (a) The buyer must pay his agent the option fee within 3 days of the effective date of the contract (b) The buyer must pay the seller the option fee within 3 days of the effective date of the contract (c) The buyer must pay his agent the option fee within 7 days of the date of the contract (d) The buyer must pay the seller the option fee within 7 days of the date of the contract - ANS (b) The buyer must pay the seller the option fee within 3 days of the effective date of the contract 29. Which statement about Texas Homestead protection is FALSE? (a) Homestead protection is automatic, and may not be waived in Texas (b) Homestead protection will prevent foreclosure for unpaid property taxes (c) An urban homestead can be as large as 10 acres (d) Homestead protection will prevent the debts of one spouse from causing the sale of the property - ANS (b) Homestead protection will prevent foreclosure for unpaid property taxes Property taxes create the highest priority lien and homestead protection does not protect the homeowner from foreclosure in this case. The remaining statements are true. 30. John sold his waterfront property to some buyers and provided the Notice of Coastal Area Property. The house on the property was behind the vegetation line at the time of the sale. Several months after the sale, a hurricane caused a considerable amount of beach erosion and the structure is now seaward of the vegetation line. What is true? (a) The buyers can sue John for damages (b) The state can force the removal of the structure (c) The buyers can sue John and the real estate brokers involved in the transaction for damages (d) The buyers can file a claim with the Title Insurance Company for loss of property - ANS (b) The state can force the removal of the structure 1. What is the criminal penalty for engaging in the real estate brokerage business in Texas without first becoming licensed by TREC? (a) A fine of up to $5,000 per day (b) Triple damages (c) A fine of not more than $4,000 (d) Imprisonment for up to 2 years - ANS (c) A fine of not more than $4,000 $4000 is the maximum criminal penalty for engaging in real estate without a license, a Class A misdemeanor. $5000 is the TREC administrative penalty, triple damages can be awarded in a civil suit and the maximum prison term for this crime is one year. 2. An individual has successfully sued a license holder in connection with a single transaction and won a judgment for $110,000. The license holder has declared bankruptcy and TREC has agreed to pay out of the recovery trust account on behalf of the license holder. How much will TREC pay? (a) $110,000 (b) $50,000 (c) $100,000 (d) $55,000 - ANS (b) $50,000 $50,000 is the maximum TREC will pay in connection with a single transaction. 3. Which of the following about TREC is FALSE? (a) TREC has 9 members (b) 6 TREC members are public and 3 TREC members are brokers (c) TREC has subpoena power (d) TREC can advise with reference to its rules and the laws that govern license holders - ANS (b) 6 TREC members are public and 3 TREC members are brokers 4. How many properties can an unlicensed investor sell in a year? (a) 0 (b) Unlimited (c) 3 (d) 5 - ANS (b) Unlimited An unlicensed investor can buy and sell his own properties an unlimited number of times per year. 5. All approved CE classes include: (a) 18 hours of legal update (b) 10 hours of legal update (c) 8 hours of legal update (d) 6 hours of legal update - ANS (c) 8 hours of legal update All CE (Continuing Education) classes include Legal 1 (4 hours) and Legal 2 (4 hours). 6. Requirements for obtaining a broker license in Texas include: (a) 5 years of experience and 3600 points (b) 5 years of experience and 9 qualifying classes (c) 4 years of experience out of the past five and 3600 points (d) 4 years of experience out of the past five and 900 points - ANS (c) 4 years of experience out of the past five and 3600 points 7. A sales agent or broker must disclose if he is representing his: (a) Spouse or siblings only (b) Brother or sister only (c) Parents or in-laws only (d) Spouse, parent or child only - ANS (d) Spouse, parent or child only 8. A license holder in Texas can: (a) Prepare a contract addendum for a client per their instructions (b) Prepare a contract for a client (c) Prepare a will for a client (d) Prepare a lease purchase agreement for a client - ANS (a) Prepare a contract addendum for a client per their instructions A license holder can prepare or write a contract addendum for a client per their instructions. A license holder cannot prepare a contract - he can only fill in the blanks on an already prepared form. Preparing a will or writing a lease purchase agreement would be considered the unlawful practice of law. 9. An unlicensed assistant can: (a) Call a prospect and schedule an appointment (b) Telemarket for listings (c) Prepare a CMA and present it to a client (d) Show a buyer no more than 3 listings - ANS (a) Call a prospect and schedule an appointment An unlicensed assistant can call a prospect and schedule an appointment. The assistant cannot telemarket for listings. The assistant can prepare a CMA, but cannot present it to and client and cannot show any properties to a buyer. 10. A broker from Colorado refers a buyer to a Texas broker. The Texas broker works with the buyer who finds a property to buy. The buyer then asks the Colorado licensee to represent his interest to the Texas broker. The Colorado broker reviews all the terms and conditions set forth in the buyer's offer and makes some suggestions that are then included in the offer. The Texas broker presents the offer. It is accepted. The transaction closes and the Texas broker earns a commission. Can he pay the Colorado broker a commission? (a) No, he cannot pay a commission to an out of state broker (b) No, the Colorado broker's actions in contributing to the preparation of the offer constitute negotiating and that is not allowed (c) Yes (d) No, be he can give a referral gift of up to $200.00 in value, not cash - ANS (c) Yes A Texas broker can pay an out of state broker a commission as long as the other broker does not negotiate in Texas. Preparing an offer and giving advice are not considered acts of negotiation. A referral gift of up to $50 in value, not cash, is given to an unlicensed person who provides a referral. 11. A broker has a verbal listing agreement with a seller. The seller has agreed to sign a written listing agreement but has not done so yet. What is true? (a) The broker's status at this time is that of a volunteer (b) The broker can place his sign on the property at this time (c) The broker has an enforceable employment contract with the seller (d) An oral listing agreement including the seller's promise to sign a written agreement makes the agreement enforceable - ANS (a) The broker's status at this time is that of a volunteer 12. A broker has received a referral from his neighbor. The referral results in a sale and the broker earns a commission on the transaction. How can he thank his unlicensed neighbor for the referral? (a) A gift of $50 cash (b) Any commission he promised (c) No commission (d) A gift of up to $100 in value, not cash - ANS (c) No commission 13. What department of the Federal Government administers the Do Not Call list? (a) NAR (b) CFPB (c) HUD (d) FTC - ANS (d) FTC 14. Disclosure of agency must be given: (a) At first face-to-face meeting (b) At first substantive dialogue (c) At first contact (d) On the TREC promulgated IABS form - ANS (b) At first substantive dialogue 15. A broker sponsors only one associate license holder. He has a listing and a buyer client who wants to purchase that listing. What is true? (a) The broker cannot do Intermediary and must send the buyer to another firm for representation (b) He can do intermediary without appointments (c) He can represent the seller and his associate can be appointed to represent the buyer (d) He cannot do intermediary but can do dual agency - ANS (b) He can do intermediary without appointments 16. A buyer has submitted an offer to purchase a seller's property without receiving the seller's disclosure of property condition. How many days does the buyer have to terminate the offer once he receives the disclosure? (a) 7 (b) 5 (c) 10 (d) Any negotiated number of days - ANS (a) 7 A buyer who has submitted an offer without receiving the seller's disclosure will have 7 days to terminate the offer after he receives the disclosure. 17. A seller's disclosure is not required: (a) When the seller lives in another state (b) On new construction that has not been occupied (c) When a builder is selling his own residence (d) On the sale of a tenant-occupied property that has been managed by a real estate license holder for years - ANS (b) On new construction that has not been occupied 18. An appointed associate under Intermediary: (a) Can give advice and opinions to one party to the transaction (b) Can only disclose facts (c) Cannot give advice, but can give opinions (d) Should refer the client to the broker for any advice - ANS (a) Can give advice and opinions to one party to the transaction 19. A Texas broker has signed an Exclusive Right to Sell listing agreement with a negotiated commission of 5.5%. He has a buyer-client with a written Buyer Representation Agreement. His buyer-client wants to buy the seller-client's property. What role will this broker play in this transaction? (a) Dual agent (b) Intermediary (c) Transaction facilitator (d) Subagent - ANS (b) Intermediary A broker in Texas representing both parties in a transaction MUST do so as an Intermediary. Dual Agency is not allowed. A transaction facilitator works with both parties but does not represent either party, and a subagent in Texas is only representing the seller, and has a buyer customer. 20. In the usual Texas listing agreement, how long is the protection period? (a) 90 days (b) 30 days (c) The number of days negotiated between the broker and the seller (d) 60 days - ANS (c) The number of days negotiated between the broker and the seller 21. TREC can investigate the actions of a license holder at its own motion. Under what other circumstances can TREC investigate a license holder? (a) If they have a written complaint no more than 5 years old (b) If they have an oral complaint no more than 4 years old (c) If they have a written, signed complaint no more than 4 years old (d) If they have a substantiated complaint - ANS (c) If they have a written, signed complaint no more than 4 years old 22. For which of the following properties does TREC have a promulgated contract form? (a) Co-op (b) Farm and ranch (c) 6 unit apartment building (d) Commercial property no more than $500,000 in value - ANS (b) Farm and ranch 23. According to the TREC contract form, when must the title company deliver the title commitment to the buyer? (a) 21 days from the effective date of the contract (b) 21 days from the receipt of the contract (c) 20 days from the effective date of the contract (d) 20 days from the receipt of the contract - ANS (d) 20 days from the receipt of the contract The title company must deliver the title commitment within 20 days from their receipt of the contract. 24. How long does a broker have to deposit earnest money in an escrow account? (a) A reasonable amount of time as defined by TREC (b) Until the close of the second business day after an offer has been delivered to the offeree (c) Until the close of business of the second business day after the offer was accepted and acceptance was communicated (d) There is no rule about this - ANS (c) Until the close of business of the second business day after the offer was accepted and acceptance was communicated 25. Which of the following statements is FALSE? (a) Real Estate Inspectors are licensed by TREC (b) Real Estate Inspectors must use promulgated inspection forms for all properties (c) Real Estate Inspectors must use promulgated forms for residential inspections (d) TREC Consumer Information Form 1-1 applies to Real Estate Inspectors - ANS (b) Real Estate Inspectors must use promulgated inspection forms for all properties TREC does not have promulgated inspection forms for all properties. They only have forms for residential inspections. 26. Which of the following statements about Earnest Money Deposits and Option Fees is FALSE? (a) Earnest money is not necessary for a contract to be valid (b) Earnest money and option fees can be combined in one check from the buyer (c) An option fee is necessary in order to have an option clause or an option contract (d) An option fee must be paid up front and is never refundable - ANS (b) Earnest money and option fees can be combined in one check from the buyer 27. Which of the following TREC forms does not include the phrase, "time is of the essence"? (a) The Short Sale Addendum (b) The Third Party Financing Addendum (c) The 1-4 Family Resale Contract (d) The Notice Regarding Coastal Area Property - ANS (d) The Notice Regarding Coastal Area Property 28. A broker has several offers on one of his listed properties. What is true? (a) He only has to present offers that he believes are in the seller's best interest (b) He must present all offers in whatever order he chooses (c) He must present all offers in the order in which they were received (d) He must present the best offer first and if the seller accepts that offer he does not have to present any additional offers - ANS (b) He must present all offers in whatever order he chooses 29. A young married couple buys a single-family home in Texas. They close on and move into the house on March 2nd. All of the following are true except: (a) The property is community property (b) They are immediately eligible for the Homestead exemption on the property (c) They are immediately eligible for Homestead protection (d) Their broker can perform property tax consulting services for them on the property - ANS (b) They are immediately eligible for the Homestead exemption on the property 30. Which of the following statements regarding mold and mold remediation is false? (a) A property owner can assess and remediate mold on his own property without a license (b) If mold is visible, it must be remediated (c) A certificate of mold remediation must be provided no more than 10 days after the work is complete (d) All certificates no more than 5 years old must be provided by sellers to buyers - ANS (b) If mold is visible, it must be remediated 1. An unlicensed assistant prospects for leads for their agent employer. Who could be fined, and/or have a license suspended or revoked by TREC? (a) the unlicensed assistant (b) the unlicensed assistant and the agent (c) the unlicensed assistant, agent and sponsoring broker (d) the sponsoring broker only - ANS (c) the unlicensed assistant, agent and sponsoring broker 2. When is the termination option fee in the 1-4 Family Contract due? (a) within two business days after the effective date of the contract (b) within three business days after the effective date of the contract (c) by midnight of the negotiated date (d) by midnight of the third calendar day after the effective date of the contract - ANS (d) by midnight of the third calendar day after the effective date of the contract Rationale: all days in the contract are calendar days unless otherwise specified. 3. The option period ends: (a) at midnight on the day mentioned in the contract (b) at 5:00 pm on the third day after the effective date (c) at midnight on the third day after the effective date (d) at 5:00 pm on the day mentioned in the contract - ANS (d) at 5:00 pm on the day mentioned in the contract 4. A broker who has a buyer representation agreement with a buyer decided to rebate part of the commission to the buyer to cover closing costs. The broker should: (a) rebate a gift card to the buyer (b) rebate $50 of the commission (c) rebate an amount on the closing disclosure (CD) (d) write the buyer a check after closing - ANS (c) rebate an amount on the closing disclosure (CD) 5. Who is eligible for a TVLB loan? (a) eligible spouses (b) parents of a veteran (c) any honorably or dishonorably discharged disabled veteran (d) siblings of a veteran - ANS (a) eligible spouses 6. When a broker posts pictures of other brokers' listings on his website, what is required? (a) written permission (b) broker's name on every picture (c) broker's name on the front page of his website only (d) both broker and listing broker's name on all pictures. - ANS (a) written permission 7. A broker's duty consists of updating/notifying agents about: (a) changes to the License Act (b) changes to the promulgated forms (c) the due date for the payment of TREC fees (d) compliance issues - ANS (d) compliance issues 8. Who can a broker pay a referral commission to? (a) an attorney in Texas (b) an attorney in another state (c) an unlicensed assistant (d) a broker license holder in this or any other state - ANS (d) a broker license holder in this or any other state 9. A buyer's agent rebates a portion of their commission to a buyer. Who needs to approve this? (a) no one (b) the buyer (c) the agent (d) the sponsoring broker - ANS (d) the sponsoring broker 10. A foreign broker advertises that he sells houses outside his state for a flat fee. What is true? (a) He must refer this transaction to a resident broker in TX. (b) This is legal in Texas. (c) He must get TREC approval to do this in TX. (d) He must be a licensed attorney to do this in TX. - ANS (a) He must refer this transaction to a resident broker in TX. 11. How much Continuing Education (CE) may be carried over to the next renewal period? (a) 10 hours (b) 18 hours (c) 8 hours (d) None - ANS (d) None Rationale: CE cannot be carried over and must be earned within the renewal period. 12. The total hours required at the end of your SAE renewal period consist of: (a) 90 hours of SAE (b) 270 core hours plus 8 hours of Legal 1 & 2 (278 total) (c) 270 hours including 6 hours of broker responsibility (d) 18 hours including 8 hours of Legal 1 & 2 13. A property is being sold "as is" per the advertisem - ANS (b) 270 core hours plus 8 hours of Legal 1 & 2 (278 total) NOTE: 180 hours were needed to earn a license. Prior to the first renewal 90 core hours of Sales Agent Apprentice Education (SAE) is needed. This 90 hours added to the 180 gives a total of 270 core hours. CAUTION: Watch the wording on this question. If they are asking for total hours needed 278 is correct. If they are asking for core hours needed 270 is correct. The 8 hours of legal update: Legal 1 and 2 does not count as core hours. 13. A property is being sold "as is" per the advertisement. Can the broker keep the commission if the sale is reversed? (a) Yes, but the buyer's agent portion must be returned. (b) No. (c) No, unless the client allows it. (d) Yes. - ANS (d) Yes. 14. A buyer under contract has had an inspection performed and doesn't want the property. What are the options to back out? (a) The buyer can back out before closing. (b) The buyer can back out during a due diligence or option clause in the contract. (c) The buyer can back out within 7 days of the effective date. (d) The buyer cannot back out of the contract. - ANS (b) The buyer can back out during a due diligence or option clause in the contract. 15. An unlicensed person owns an option to purchase real property for a $190,000. He advertises the option for sale for $20,000. This action is: (a) only legal if he uses the service of a licensed broker (b) illegal (c) only legal with full disclosure of the terms of the option (d) legal if the seller owns three options or less - ANS (c) only legal with full disclosure of the terms of the option 16. An agent switched brokers in the middle of a sale where the house is already under contract. What is true? (a) The brokers must split the commission amicably. (b) The agent may select the higher of splits between brokers. (c) The first broker is the primary broker for the transaction. (d) The sale will close under the sponsoring broker at the time of closing. - ANS (c) The first broker is the primary broker for the transaction. 17. An agent is aware of a foundation issue that was not disclosed on the Seller's Disclosure. She discusses it with her broker who advises the agent to let the Seller fill out the Disclosure. Who is in violation of DTPA? (a) There is no violation of the Act. (b) The agent is in violation. (c) Only the broker is in violation. (d) Both the agent and broker are in violation. - ANS (d) Both the agent and broker are in violation. 18. Where should the consumer protection notice be? (a) on every e-mail (b) on every contract offer sent (c) on the website in 10-point font (d) on the broker's office wall - ANS (d) on the broker's office wall 19. Regarding the option fee in the TREC 1-4 Family Resale Contract, what is true? (a) it must be at least $100 (b) it must be at least $200 (c) no money is required if the buyer already paid an earnest money deposit (d) it must be an amount discussed/agreed to by the buyer and seller - ANS (d) it must be an amount discussed/agreed to by the buyer and seller 20. What is an example of something that could be entered in paragraph 11? (a) the information from any TAR addendum (b) the information from any TREC addendum (c) the fact that the seller will pay ½ of the closing costs for the buyer (d) the fact that the seller is a licensed real estate sales person - ANS (c) the fact that the seller will pay ½ of the closing costs for the buyer Rationale: business details - the fact that the seller will pay ½ of the closing costs for the buyer. 21. Where or to whom does the Earnest Money Deposit go? (a) to the title company (b) to an escrow account (c) to the broker (d) to the seller - ANS (b) to an escrow account 22. What would NOT cause license revocation by TREC? (a) a plea of nolo contendere to a felony involving fraud (b) a second DUI conviction (c) selling real estate by lottery (d) failure to notify a buyer in writing to get an attorney's opinion of title or a title policy on a property - ANS (b) a second DUI conviction 23. A sales agent is hired to list the property of a deceased party who died testate. The license holder must: (a) determine if the deceased committed suicide (b) determine if the deceased had an administrator (c) obtain the signatures of all heirs (d) obtain the signature of the executor named in the will - ANS (d) obtain the signature of the executor named in the will 24. A buyer and seller have signed a Texas sales contract. The buyer has not received the Seller's Disclosure. The buyer can: (a) file a lawsuit against the seller (b) terminate the contract for up to 7 days after he receives the disclosure (c) terminate the contract any time before closing (d) terminate the contract for up to 3 days after he receives the disclosure - ANS (b) terminate the contract for up to 7 days after he receives the disclosure 25. What are the requirements to become a licensed broker in TX? (a) 900 hours of education + 3600 points, in addition to 4 out of the past 5 years active real estate salesperson licensure (b) 900 hours of education + 3600 points, in addition to 2 out of the past 3 years active real estate salesperson licensure (c) 900 hours of education + 2500 points, in addition to 4 out of the past 5 years active real estate salesperson licensure (d) 900 hours of education + 2500 points, in addition to 2 out of the past 3 years active real estate salesperson licensure - ANS (a) 900 hours of education + 3600 points, in addition to 4 out of the past 5 years active real estate salesperson licensure 26. A property has been listed for sale at $495,000. Several buyers are interested in the property and after a small bidding war the sellers have accepted an offer for $505,000. Included in the offer was the condition that the dining room furniture, washer and dryer be part of the sale. Where can this information be covered to insure that all parties are protected. (a) in the sales contract in paragraph 11 - Special Provisions (b) in the sales contract in paragraph 2. C. - Accessories (c) in an addendum to the sales contract and a Bill of Sale (d) in an addendum to the sales contract and an amendment to the deed - ANS (c) in an addendum to the sales contract and a Bill of Sale Rationale: the transfer of personal property as part of a sale requires a Bill of Sale and an addendum. 27. A buyer has purchased an option on a commercial property for $5 million. The negotiated option fee is $50,000 and the parties have agreed that it will be paid within 5 days. How/where may the option fee be paid? (a) by personal check to the title company (b) by wire transfer to the broker's escrow account (c) by promissory note to the seller (d) by money order to the seller - ANS (d) by money order to the seller Rationale: an option fee is always paid upfront directly to the seller and is not refundable. 28. The primary purpose of TREC is to: (a) make rules and regulations (b) suspend or revoke licenses (c) protect the public (d) promulgate forms - ANS (c) protect the public 29. Through TRELA you may be awarded damages up to: (a) actual damages (b) 3x the amount of money received (c) the negotiated amount between the parties to the transaction (d) up to the limit of the Broker's E&O insurance - ANS (b) 3x the amount of money received 30. An unlicensed assistant may do which of the following? (a) show a home (b) host an open house (c) give an overview of the market to a buyer (d) prepare a CMA - ANS (d) prepare a CMA Rationale: Answer choices a.,b., and c are all activities that are prohibited for an unlicensed person.